There was much hope that when Q3 GDP soared to 5%, primarily on the back of Obamacare spending recalendarization and a massive consumption/personal saving data revision, that the US economy would finally enter lift-off mode. Those hopes were reduced by about 60% when moments ago the BEA announced that Q4 GDP was revised from the original 2.64% print to only 2.18%, which while better than expected, was the lowest economic growth rate since the "polar vortex."
The main reason for the revision: a substantial drop in growth contribution from private inventories, which instead of adding 0.82% to the bottom GDP line, only contributed 0.12% in Q4 following the first revision. To be sure, this was perfectly expected, and is exactly what we said would happen last month after the first inventory number.
This short commentary, with a couple of excellent charts, appeared on the Zero Hedge website at 8:46 a.m. EST on Friday morning---and I thank Dan Lazicki for today's first story.
January's brief 'hope' bounce following 3 months of weakness is long forgotten as February's Chicago PMI crashes to 45.9 (missing expectations of 57.5) - its lowest since July 2009.
This is the biggest MoM drop since Lehman in Oct 2008. New Orders suffered the largest monthly decline on record.
Seems like it is time to blame the weather... PMI says it is "difficult to gauge magnitude of weather and port strike" but blames it nonetheless.
This is the second story in a row from the Zero Hedge website. This one showed up there at 9:48 a.m. EST yesterday---and it's also the second in a row from reader Dan Lazicki.
I think the S&P is disconnected from the fundamentals in the US economy. Growth last year was a quarter slower than it was in 2013. We’re on the cusp of either zero inflation or deflation. Corporate profits using the Bureau of Economic Analysis numbers, compiled using data from the Internal Revenue Service, showed year over declines in all the first three quarters of last year (4Q is not yet available). In the third quarter, the after-tax profits adjusted for inventory gains/losses and over/under depreciation were 7% below a year ago.
The standard of living declined again in 2014. And a lot of the growth we had in 2014 really was a massive building of inventories, which is often the case when stock prices are high and top line is decelerating.
The economy enters 2015 in very weak shape. None of the big ticket sectors are doing well. Capital spending is declining, being paced by extreme weakness in oil & gas drilling, which has really been the driving force in manufacturing over the last four years. The best you can say about the housing sector is that it is flat. Not a very important sector.
Vehicle sales are below the best levels of last year and the trade sector is deteriorating. It is very difficult to move the US economy forward by selling things over the counter and through the shopping cart. The US economy is very fragile. And the fragility is highlighted by the fact that firms simply do not have pricing power.
This rather longish interview with Lacy appeared on the Zero Hedge website at 6:15 p.m. EST Friday evening---and it's also courtesy of Dan Lazicki, for which I thank him. It's worth reading if you have the time.
Central banks are stooping to new lows to conquer weak inflation.
The monetary guardians of the euro area, Switzerland, Sweden and Denmark are now imposing negative interest rates on bank deposits or on funding operations that feed through to the real economy. Analysts at Commonwealth Bank of Australia reckon almost a quarter of worldwide central-bank reserves now carry a negative yield.
By confounding the onetime idea that they had to stop cutting borrowing costs at zero, monetary-policy makers are seeking to spur spending over saving. They also expect their currencies to weaken as capital inflows are discouraged.
The risk is that negative rates backfire and result in even less demand. That could happen if people begin stuffing their cash under mattresses, or if rates below zero eat into the profit margins of banks or distort financial markets.
This very interesting Bloomberg article, filed from London, appeared on their Internet site at 3:27 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for sending it our way. There was another Bloomberg story about this by Mohamed A. El-Erian early Friday morning as well---and it's headlined "10 Things to Know About Negative Bond Yields". I thank Dan Lazicki for this one as well.
The Chinese Credit Bubble has been historic, dwarfing the fateful Japanese Bubble from the eighties. Arguably, China’ Bubble today even exceeds its mirror image U.S. Bubble. I have also referred to the Chinese renminbi link to the dollar as the King of All Currency Pegs. The bullish consensus scoffs at notions of Chinese fragility. With an international reserve position of $3.8 TN (and shrinking), the belief is that China has more than sufficient “money” to stimulate the economy, recapitalize the banking system and support the renminbi. Yet with anecdotes suggesting mounting outflows and heightened nervousness, a destabilizing dislocation in renminbi trading becomes a real possibility.
How long will the PBOC be willing to use the nation’s reserves to allow speculators, fraudsters and Chinese elite to cash out of China at top dollar? Chinese officials confront great challenges that will require difficult decisions. So far, bullish sentiment remains impervious to the major uncertainties enveloping China’s economy, financial system and policy making. The perception that Chinese officials have everything well under control could soon be challenged.
Meanwhile, signs of Bubble excess become increasingly conspicuous in the U.S. – Silicon Valley, Manhattan, upper-end real estate around the country, subprime auto loans, jumbo mortgages, record corporate debt issuance, etc. Record stock and bond prices – record prices for anything that provides a yield. Record hedge fund assets, in the face of ongoing performance issues. Record ETF assets. Resurgent derivative markets.
The list goes on and on. Doug's weekly commentary appeared on his creditbubblebulletin.ca website yesterday evening---and I thank reader U.D. for sending it my way.
In an unusual public exchange, the director of the National Security Agency and a senior Yahoo executive clashed over cyber-spying Monday, illustrating the growing chasm between Washington and Silicon Valley over whether intelligence officials should have broad access to the products being developed by the nation's top technology firms.
For a normally staid Washington cyber-security conference, this one hosted by New America, the tense back-and-forth had the packed audience of executives, senior policy makers, bureaucrats and journalists buzzing.
Speaking at the signature event of the conference, NSA Director Adm. Mike Rogers called for a "legal framework" that would enable law enforcement and anti-terrorism officials to tap into encrypted data flowing between ordinary consumers -- echoing a stance laid out by other administration officials, including FBI Director James Comey and Attorney General Eric J. Holder. But technology executives as well as many cybersecurity experts argue there is no way to build in such "back doors" without fundamentally undermining the security that protects online communications around the world. In response to recent revelations about government snooping, firms such as Apple and Google have designed their latest mobile software to make it impossible for the companies to turn over data from smartphones and tablet computers to police -- even when authorities have a search warrant.
This extremely interesting article showed up on The Washington Post website on Monday---and I thank reader P.F. for sharing it with us.
The Clinton Foundation accepted millions of dollars from seven foreign governments during Hillary Rodham Clinton’s tenure as secretary of state, including one donation that violated its ethics agreement with the Obama administration, foundation officials disclosed Wednesday.
Most of the contributions were possible because of exceptions written into the foundation’s 2008 agreement, which included limits on foreign-government donations.
The agreement, reached before Clinton’s nomination amid concerns that countries could use foundation donations to gain favor with a Clinton-led State Department, allowed governments that had previously donated money to continue making contributions at similar levels.
The new disclosures, provided in response to questions from The Washington Post, make clear that the 2008 agreement did not prohibit foreign countries with interests before the U.S. government from giving money to the charity closely linked to the secretary of state.
This is the second story in a row from The Washington Post---and this one is courtesy of Norman Willis. It was posted on their Internet site on Wednesday sometime.
For years, politicians wanting to block legislation on climate change have bolstered their arguments by pointing to the work of a handful of scientists who claim that greenhouse gases pose little risk to humanity.
One of the names they invoke most often is Wei-Hock Soon, known as Willie, a scientist at the Harvard-Smithsonian Center for Astrophysics who claims that variations in the sun’s energy can largely explain recent global warming. He has often appeared on conservative news programs, testified before Congress and in state capitals, and starred at conferences of people who deny the risks of global warming.
But newly released documents show the extent to which Dr. Soon’s work has been tied to funding he received from corporate interests.
He has accepted more than $1.2 million in money from the fossil-fuel industry over the last decade while failing to disclose that conflict of interest in most of his scientific papers. At least 11 papers he has published since 2008 omitted such a disclosure, and in at least eight of those cases, he appears to have violated ethical guidelines of the journals that published his work.
No surprises here. Another so-called climate change "expert" caught with his hand in the proverbial cookie jar. This long essay appeared on The New York Times website last Saturday---and for obvious reasons had to wait for today's column. It's the second offering of the day from reader P.F.
This week I was invited to address an important conference of the Russian Academy of Sciences in Moscow. Scholars from Russia and from around the world, Russian government officials, and the Russian people seek an answer as to why Washington destroyed during the past year the friendly relations between America and Russia that President Reagan and President Gorbachev succeeded in establishing. All of Russia is distressed that Washington alone has destroyed the trust between the two major nuclear powers that had been created during the Reagan-Gorbachev era, trust that had removed the threat of nuclear Armageddon. Russians at every level are astonished at the virulent propaganda and lies constantly issuing from Washington and the Western media. Washington’s gratuitous demonization of the Russian president, Vladimir Putin, has rallied the Russian people behind him. Putin has the highest approval rating ever achieved by any leader in my lifetime.
Washington’s reckless and irresponsible destruction of the trust achieved by Reagan and Gorbachev has resurrected the possibility of nuclear war from the grave in which Reagan and Gorbachev buried it. Again, as during the Cold War the specter of nuclear Armageddon stalks the earth.
Why did Washington revive the threat of world annihilation? Why is this threat to all of humanity supported by the majority of the US Congress, by the entirety of the presstitute media, and by academics and think-tank inhabitants in the US, such as Motyl and Weiss, about whom I wrote recently?
This commentary by Paul is one of today's stories that falls into the absolute must read category. It appeared on this website on Thursday---and had to wait for a spot in today's column. By the way, did I mention that this an absolute must read---because it certainly is. Do it now! I thank Roy Stephens for sending it to me.
"The sovereign is he who decides on the exception,” said conservative thinker Carl Schmitt in 1922, meaning that a nation’s leader can defy the law to serve the greater good. Though Schmitt’s service as Nazi Germany’s chief jurist and his unwavering support for Hitler from the night of the long knives to Kristallnacht and beyond damaged his reputation for decades, today his ideas have achieved unimagined influence. They have, in fact, shaped the neo-conservative view of presidential power that has become broadly bipartisan since 9/11. Indeed, Schmitt has influenced American politics directly through his intellectual protégé Leo Strauss who, as an émigré professor at the University of Chicago, trained Bush administration architects of the Iraq war Paul Wolfowitz and Abram Shulsky.
All that should be impressive enough for a discredited, long dead authoritarian thinker. But Schmitt’s dictum also became a philosophical foundation for the exercise of American global power in the quarter century that followed the end of the Cold War. Washington, more than any other power, created the modern international community of laws and treaties, yet it now reserves the right to defy those same laws with impunity. A sovereign ruler should, said Schmitt, discard laws in times of national emergency. So the United States, as the planet’s last superpower or, in Schmitt’s terms, its global sovereign, has in these years repeatedly ignored international law, following instead its own unwritten rules of the road for the exercise of world power.
This longish essay by Alfred W. McCoy is your second absolute must read story in a row. It was posted on the tomdispatch.com Internet site via the Asia Times on Tuesday---and for length and content reasons, had to wait for today's column. It is, like the Paul Craig Roberts commentary that preceded it, a very disturbing read. But no matter how ugly, it is the truth. Not surprisingly, it's courtesy of Roy Stephens once again.
In 1975, Leonard Nimoy published an autobiography with the defiant title, "I Am Not Spock" — an attempt to show the world he had many more facets than the pointy-eared character that had come to define him.
Yet two decades later, after proving that with a career that became a rich blend of roles beyond "Star Trek" along with directing, writing and photography, he bowed to fate with "I Am Spock," a revisionist sequel.
Nimoy had come to appreciate Mr. Spock's enduring legacy and the inspiration the man of logic provided the actor and his fans alike.
"He's a part of me," he wrote in his second memoir. "Not a day passes that I don't hear that cool, rational voice commenting on some irrational aspect of the human condition."
I remember watching Star Trek on TV in Toronto back in the summer of 1967---and I've been a 'trekkie' ever since. It makes me sad [and old] to post this story. This AP article, filed from Los Angeles, appeared on the canada.com Internet site yesterday---and I thank reader M.A. for bringing it to my attention---and now to yours.
Financial privacy is essentially dead.
I think it’s only prudent to assume that sooner or later all the details of your financial life will come to rest in a government computer—if they haven’t done so already—and to plan accordingly.
We live in a world where pretty much every penny you earn, save, and spend is stored in a permanent record somewhere and can be retrieved for scrutiny one day if needed.
It’s not a comfortable or happy thing. But no matter how unpleasant it is, I believe it’s a reality we have to face.
This most excellent commentary was written by International Man's senior editor, Nick Giambruno---and it's worth your while, especially if you're an American citizen.
Oppenheimer Funds’ Alessio de Longis and Principal Global Investors CEO Jim McCaughan discuss the impact of the threat of deflation on banking and the economy. They speak on “Bloomberg Surveillance.”
This 5:58 minute Bloomberg video clip was posted on their website at 5:05 a.m. MST on Friday---and it's another offering from Dan Lazicki.
GoldMoney research director Alasdair Macleod writes that Greece and the European Union are both in terribly weak positions relative to the other and that this may bear more heavily than expected on the euro, which has no long history and thus less credibility than other currencies.
Macleod's commentary is headlined "The Euro May Be Riskier Than You Think" and it was posted on the goldmoney.com Internet site on Friday. I found it embedded in a GATA release.
Germany is expected to approve the new eurozone bail-out deal for Greece in a parliamentary vote on Friday but has warned that Athens will receive nothing unless it honours its commitments under the deal.
Wolfgang Schaeuble, the German finance minister, said he was “stunned” after his Greek counterpart, Yanis Varoufakis, spoke again of a debt restructuring on Greek radio, and the Athens government indicated it would block plans to privatise strategic assets.
“If the Greeks violate the agreements, then they have become obsolete," a visibly angry Mr Schaeuble said at a meeting to persuade German MPs to support the deal in today’s vote. The meeting in Berlin came after Germany’s biggest-selling newspaper launched a campaign against the Greece deal, printing “NEIN!” across an entire inside page, and encouraging readers to take selfies holding the page up and send them in for publication.
“No more billions for greedy Greeks,” the newspaper added, in only slightly smaller print. The page was printed in the blue and white of the Greek flag, instead of Bild’s more usual red and white.
This story appeared on the telegraph.co.uk Internet site at 9:29 p.m. GMT on Thursday evening---and it's courtesy of Roy Stephens.
Greece won’t be seeking a third international bailout after the four-month extension of its current program expires, Greek Prime Minister Alexis Tsipras said.
In a televised speech to his government, Tsipras also said the country has requested a reduction of its debt, despite European creditors demanding that Greece pay it in full.
"Some have bet on a third bailout, on the possibility of a third bailout in June. I'm very sorry but once again we will disappoint them," the PM declared, adding that “the Greek people put an end to bailouts with their vote."
Well, dear reader, it sounds like he's put a stake in the ground on this issue, so we'll see how things progress over the next four months, if it gets that far. This news item appeared on the Russia Today website at 9:28 p.m. Moscow time on their Friday evening---and it's courtesy of Roy Stephens.
Ukraine’s Naftogaz has paid Gazprom $15 million for gas delivery. At current levels, the prepayment covers one day's gas consumption and will be spent by Tuesday, Gazprom spokesperson Sergey Kupriyanov said.
“Today at 9:20am MSK Gazprom received a payment from Ukraine’s Naftogaz in the amount of $15 million. At the current level of supply this sum will be enough roughly for one day,” he said.
"If Naftogaz paid for another 24 hours, it means the resources would last through Monday till Tuesday," he said.
The relatively small prepayment suggests Kiev is buying time before trilateral talks in Brussels on march 2nd. Russian energy minister Alexander Novak had warned Kiev’s failure to pre-pay would mean a cut-off.
This news item showed up on the Russia Today website at 7:10 a.m. Moscow time on their Friday morning---and once again it's another contribution from Roy Stephens.
The United Arab Emirates is not selling military equipment to Ukraine, despite earlier statements by Kiev officials, the UAE Foreign Ministry said.
“An agreement on cooperation in defense technologies the UAE and Ukraine signed recently does not stipulate any contracts for deliveries of weaponry to the Ukrainian side,” said Faraj Faris al-Mazrouei, adviser to UAE Foreign Minister Abdullah bin Zayed Al Nahyan.
The deal was only one element in a future system of cooperation between the two countries in the field of defense technologies, RIA Novosti reported al-Mazrouei as saying, citing the Emarat Al-Yawm news portal.
The UAE and Ukraine signed a memorandum of understanding on military-technical cooperation during the IDEX-2015 defense exhibition in Abu Dhabi earlier this week.
This Russia Today story appeared on their website at 7:28 p.m. Moscow time on their Friday evening---and it's also courtesy of Roy Stephens.
Boris Nemtsov, a Russian opposition leader and sharp critic of President Vladimir Putin, was gunned down Saturday near the Kremlin, officials said. Nemtsov was killed just a day before a protest planned against Putin's rule.
The death of Nemtsov, a 55-year-old former deputy prime minister, ignited a fury among opposition figures who assailed the Kremlin for creating an atmosphere of intolerance of any dissent. Putin quickly offered his condolences and called the murder a provocation.
Putin ordered Russia's law enforcement chiefs to oversee the probe. "Putin noted that this cruel murder has all the makings of a contract hit and is extremely provocative," presidential spokesman Dmitry Peskov said in remarks carried by Russian news agencies.
Nemtsov assailed the government's inefficiency, rampant corruption and the Kremlin's Ukraine policy, which has strained relations between Russia and the West to a degree unseen since Cold War times.
This news story was posted on the cbc.ca Internet site at 5:14 p.m. EST yesterday afternoon---and I thank reader David Caron for bringing it to our attention. There was a story about this on the Russia Today website as well---and it's headlined "Opposition politician Boris Nemtsov killed in the center of Moscow". I thank Juli Placek for that one.
Boris Nemtsov did not pose a threat to the Russian government, according to presidential press secretary Dmitry Peskov. The murder of the Russian opposition figure has been called a "provocation" by a number of politicians and public figures.
“With all due respect to the memory of Boris Nemtsov, in political terms he did not pose any threat to the current Russian leadership or Vladimir Putin. If we compare popularity levels, Putin’s and the government’s ratings and so on, in general Boris Nemtsov was just a little bit more than an average citizen,” Peskov said on Saturday.
Russian President Vladimir Putin has condemned the assassination and expressed his condolences to the family, Peskov added. “Putin has stressed that this brutal murder has all [the] signs of a contract murder and is extremely provocative.”
Irina Khakamada, an opposition figure who was Nemtsov's ally in the SPS party (Union of Right Forces), called the murder a "provocation" aimed at destabilizing Russia.
This is Russia Today news item appeared on their Internet site at 3:18 a.m. Moscow time on their Saturday morning, which was 7:18 p.m. in Washington on their Friday evening. I thank Roy Stephens once again---and it's definitely worth reading.
There is no doubt in my mind at all that either this is a fantastically unlikely but always possible case of really bad luck for Putin---and Nemtsov was shot by some nutcase or mugged, or this was a absolutely prototypical western false flag: you take a spent politician who has no credibility left with anyone with an IQ over 70, and you turn him into an instant "martyr for freedom, democracy, human right and civilization".
By the way if, as I believe, this is a false flag, I expect it to be a stunning success in the West and a total flop in Russia: by now, Russians already can smell that kind of setup a mile away and after MH-17 everybody was expecting a false flag. So, if anything, it will only increase the hostility of Russians towards the West and rally them around Putin. In the Empire, however, this will be huge, better than Politkovskaya or Litvinenko combined. A "Nemtsov" prize will be created, a Nemtov statue will be place somewhere (in Warsaw?), the U.S. Congress will pass a "Nemtsov law" and the usual combo package of "democratic hagiography" will be whipped-up.
What worries me most is that the Russian security services did not see this one coming and let it happen. This is a major failure for the FSB which will now have a lot at stake to find out who did it. I expect them to find a fall-guy, a patsy, who will have no provable contacts with any western services and who, ideally, might even have some contacts with the Russian services (like Andrei Lugovoi).
As for the "liberal" or "democratic" "non-system" - it will probably re-brand the upcoming protests as a "tribute to Nemtsov" thereby getting more people into the streets.
There are folks in Langley tonight who got a promotion.
This very interesting commentary/speculation was posted on the vineyardsaker.com Internet site on Friday evening sometime---and it is, once again, courtesy of Roy Stephens.
Bashing the Russian economy has lately become a popular pastime. In his state of the nation address last month, U.S. President Barack Obama said it was "in tatters." And yesterday, Anders Aslund of the Peterson Institute for International Economics published an article predicting a 10 percent drop in gross domestic product this year -- more or less in line with the apocalyptic predictions that prevailed when the oil price reached its nadir late last year and the ruble was in free fall.
Aslund's forecast focuses on Russia's shrinking currency reserves, some of which have been earmarked for supporting government spending in difficult times. At $364.6 billion, they are down 26 percent from a year ago and $21.6 billion from the beginning of this year. Aslund expects $166 billion to be spent on infrastructure investments and bailing out companies, and another $100 billion to exit via capital flight and other currency outflows. As a result, given foreign debts of almost $600 billion, "Russia's reserve situation is approaching a critical limit," he says.
What this argument ignores is that Russia's foreign debts are declining along with its reserves -- that's what happens when the money is used to pay down state companies' obligations. Last year, for example, the combined foreign liabilities of the Russian government and companies dropped by $129.4 billion, compared with a $124.3 billion decline in foreign reserves. Beyond that, a large portion of Russian companies' remaining foreign debt is really part of a tax-evasion scheme: By lending themselves money from abroad, the companies transfer profits to lower-tax jurisdictions. Such loans can easily be extended if sanctions prevent the Russian side from paying.
This opinion piece put in an appearance on the bloombergview.com Internet site at 2:51 p.m. EST on Thursday afternoon---and I thank South African reader B.V. for digging it up for us.
When it comes to the Ukraine proxy war, which started in earnest just about one year ago with the violent coup that overthrew then president Yanukovich and replaced him with a local pro-U.S. oligarch, there has been no ambiguity who the key actors were: on the left, we had the west, personified by the US, the European Union, and NATO in general; while on the right we had Russia. In fact, if there was any confusion, it was about the role of that other "elephant in the room" - China.
To be sure, a question few asked throughout the Ukraine civil war is just whose side is China leaning toward. After all the precarious balance of power between NATO and Russia had resulted in a stalemate in which neither side has an obvious advantage (even as the Ukraine economy died, and its currency hyperinflated, waiting for a clear winner), and the explicit or implicit support of China to either camp would make all the difference in the world, not to mention the world's most formidable axis.
We finally got the answer.
Xinhua reported that late on Thursday Qu Xing, China's ambassador to Belgium, was quoted as blaming competition between Russia and the West for the Ukraine crisis, urging Western powers to "abandon the zero-sum mentality" with Russia. Cited by Reuters, Xing said that Western powers should take into consideration Russia's legitimate security concerns over Ukraine.
Reuters' assessment of Xing speech: "an unusually frank and open display of support for Moscow's position in the crisis."
This is another Zero Hedge news story---and it showed up on their website at 2:25 p.m. EST on Friday afternoon---and once again I thank Dan Lazicki for sharing it with us.
American think-tank Stratfor has issued a new 'Decade Forecast,' which says the E.U. will decay, China will end up in "a communist dictatorship," and Russia will disintegrate...though it hasn't done so yet, despite such predictions taking place in the past.
“It is unlikely that the Russian Federation will survive in its current form,” the forecast’s chapter dedicated to Russia begins. The research maintains that Moscow’s “failure to transform energy revenues into self-sustaining economy” will eventually lead to a “repeat of the Soviet Union's experience in the 1980s and Russia's in the 1990s,” with the process accompanied by a demographic decline that is set to “really hit” Russia.
However, the forecaster's founder and CEO, George Friedman, recently said that Russia has the ability to emerge from U.S.-led sanctions and the recent drop in the ruble due to falling oil prices. "Russians' strength is that they can endure things that would break other nations," Friedman said, suggesting that the country "has military and political power that could begin to impinge on Europe."
This article, which certainly falls into the absolute must read category, was posted on the Russia Today website on Tuesday evening Moscow time---and for content reasons, had to wait for today's column. I thank Norman Willis for bringing it to my attention---and now to yours.
The recent 70th anniversary of the liberation of Auschwitz was a reminder of the great crime of fascism, whose Nazi iconography is embedded in our consciousness.
Fascism is preserved as history, as flickering footage of goose-stepping blackshirts, their criminality terrible and clear. Yet in the same liberal societies whose war-making elites urge us never to forget, the accelerating danger of a modern kind of fascism is suppressed; for it is their fascism.
"To initiate a war of aggression…," said the Nuremberg Tribunal judges in 1946, "is not only an international crime, it is the supreme international crime, differing only from other war crimes in that it contains within itself the accumulated evil of the whole."
Had the Nazis not invaded Europe, Auschwitz and the Holocaust would not have happened. Had the United States and its satellites not initiated their war of aggression in Iraq in 2003, almost a million people would be alive today; and Islamic State, or ISIS, would not have us in thrall to its savagery. They are the progeny of modern fascism, weaned by the bombs, bloodbaths and lies that are the surreal theatre known as news.
Like the fascism of the 1930s and 1940s, big lies are delivered with the precision of a metronome: thanks to an omnipresent, repetitive media and its virulent censorship by omission.
This is your fourth and last absolute must read of the day. It, too, is on the longish side. It appeared on the Asia Times website on Thursday---and once again I thank Roy Stephens for bringing it to our attention.
India has proposed creating a free trade zone with the Eurasian Economic Union of Russia, Kazakhstan, Belarus and Armenia, said Alexey Pushkov, head of the International Committee of Russian State Duma.
"The question was raised by India, which is now considering a free trade agreement with the Eurasian Economic Union. This is a new level in our relationship. The possibility is being discussed," he told reporters Friday during an official visit to New Delhi.
On Thursday TASS reported that India will start negotiating a comprehensive free trade agreement with the Customs Union of Russia, Belarus and Kazakhstan within the next six months.
The Eurasian Economic Union of Armenia, Belarus, Kazakhstan and Russia started functioning in January 2015.
This news item showed up on the Russia Today Internet sit at 2:38 p.m. Moscow time on their Friday---and it's the final offering of the day from Roy Stephens, and I thank him on your behalf.
Listen to Eric Sprott share his views on new U.S. economic data, the chaos in the foreign exchange market, the scam in precious metals on the COMEX, the options expiry, and possibility of changes to India’s gold import taxes.
This 8:17 minute audio interview conducted by sprottmoney.com's Geoff Rutherford, appeared on their website yesterday.
Kitco News speaks with Bear Creek Mining chairman Catherine McLeod-Seltzer to see how she sees the industry set up for 2015. “A lot of write-offs were taken in the industry,” she says. “But I think people are ready for a fresh start. They see reasons why metals prices have bottomed and may start to move up,” she adds.
According to McLeod-Seltzer, the industry is just in a cycle and she thinks it has bottomed. “The price has been within a range quite stable, so I think that’s part of the bottoming process. And I do know that we consume 90 million ounces a year of our reserves as an industry, and we’re not replacing them,” she says, adding that prices need to move higher in order to support the struggling mining companies.
It's obvious that its not only the male members of the precious metal mining industry that are clueless. Prices will rise when they're allowed to rise---and not a moment sooner. This 5:06 minute video interview was posted on the kitco.com Internet site yesterday---and it's courtesy of Dan Lazicki.
As much as three-fifths of India's total gold imports last year came from Switzerland, reflecting a significant jump in just a couple of years.
India imported 471.9 tonnes of gold from Switzerland in 2014, according to precious metals consultancy GFMS Thomson Reuters that quoted a country-by-country breakdown of gold imports and exports released by the Alpine country for the first time since 1980. This represents 61% of India's total gold imports of 769 tonnes last year as per World World Gold Council data.
Industry sources say that the quantum of gold imports from Switzerland has increased to around 60% in 2013 and 2014 from an average 45%-50% in the decade through 2012.
This very interesting gold-related news item from India, which was filed from Mumbai, appeared on the indiatimes.com Internet site at 7:02 p.m. IST on their Thursday evening---and I found it on the Sharps Pixley website in the wee hours of this morning.
China plans to launch a yuan-denominated gold fix this year to be set through trading on an exchange, sources familiar with the matter said, as the world's second-biggest bullion consumer seeks to gain more say over the pricing of the precious metal.
The Chinese benchmark would be derived from a new 1-kilogram contract to be launched on the state-run Shanghai Gold Exchange, a senior source directly involved in the process told Reuters.
China, also the top producer of gold, feels that its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.
This Reuters article, filed from Singapore, put in an appearance on their Internet site at 3:07 a.m. EST on Friday morning---and I found this gold-related story on the gata.org Internet site.
The latest figures for net gold exports from Hong Kong into China confirm the latter nation’s strong demand in the run up to the Chinese New Year holiday. The figure for January was 76 tonnes, up from 71 tonnes in December, but it should be realised that this Hong Kong figure relates specifically to Chinese gold imports – not total demand – and then only to a diminishing proportion of the Asian dragon’s total gold imports.
If one views known export levels from the U.S. and Switzerland, where official statistics differentiate between gold going to Hong Kong and to mainland China direct, then the percentage moving in via Hong Kong is perhaps only 60% of total Chinese gold imports – still significant, but well below earlier years when Hong Kong will have accounted for perhaps 90% or more of total Chinese gold imports and was thus used as a proxy by Western analysts for the total figure – a pattern which continues today in much mainstream media coverage of Chinese gold import figures.
Last year China relaxed import controls to allow far more direct shipments via other ports of entry – notably Shanghai and Beijing which has reduced the amounts routed through Hong Kong.
I reported on the Chinese gold imports through Hong Kong the other day, but just gave the number---and didn't elaborate on it. Lawrie has done the heavy lifting for me/us---and it was posted on the mineweb.com Internet site at 2:45 p.m. GMT yesterday. It's certainly worth reading.
Technology giant Apple may soon buy up one third of the world’s gold in order to meet the demands of its highly anticipated Apple Watch, according to reports.
Interest in the high-end model, featuring 18-karat gold casing, is picking up and the firm is already taking the necessary steps to have enough of them in stock. According to WSJ.com, Apple plans to start producing more than one million units per month in the second quarter of the year, anticipating high demand from Asian markets, mainly China.
Josh Centers, from TidBits, estimates that each gold watch will contain 2 troy ounces (62.2 grams) of gold. So, based on the estimated sales figure, he concludes that Apple will need 746 tons of gold a year, or about 30% of the world’s annual production.
I'm sure the watch will do well initially, but its novelty value won't last forever. Of course if it is successful, they may get a phone call from the powers-that-be saying that this is not the best idea in the world. This tiny story appeared on the mining.com Internet site on Thursday sometime---and I thank James Ackers for sharing it with us.
As previewed earlier today, January CPI data was historic in that, 6 years after Lehman, the US just reported its first negative headline CPI print, with overall inflation, or rather deflation, in January coming at -0.1%, in line with expectations, and down from the 0.8% in December. On a monthly basis, CPI tumbled by 0.7% from December, driven almost entirely by collapsing energy prices. Excluding the Great financial crisis, one has to go back a few years to find the last time the US posted annual headline deflation.... all the way back to August 1955, or just about the time Mary McFly was trying not to dance with his mother.
Here is the culprit for the plunge: "The energy index fell 9.7 percent as the gasoline index fell 18.7 percent in January, the sharpest in a series of seven consecutive declines. The gasoline decrease was overwhelmingly the cause of the decline in the all items index, which would have risen 0.1 percent had the gasoline index been unchanged. The fuel oil index also fell sharply, and the index for natural gas turned down, although the electricity index rose."
Today's first news item was posted on the Zero Hedge website at 8:52 a.m. EST on Thursday morning---and it's courtesy of Dan Lazicki. Elliot Simon sent a similar story from the marketwatch.com Internet site yesterday morning---and it's headlined "Inflation trend turns negative for first time since 2009".
While Goldman Sachs Group Inc. employees may get less compensation than in the past, many cashed in last year for a payday they’ve been awaiting since the depths of the financial crisis.
Employees exercised options worth $2.03 billion in 2014. More than 96 percent of the contracts were granted as part of 2008 compensation. Last year marked the first time bankers were able to take advantage of those awards.
Goldman Sachs’s stock has more than doubled since it granted 36 million options in December 2008 to give top performers incentive to stay. The bank had been forced to slash compensation costs that year, as a global credit crisis endangered the firm and pushed its shares down 61 percent.
The more-than $2 billion total disclosed in a regulatory filing this week is the pretax gain from exercising the options. Recipients -- who can choose to keep the stock or convert it to cash -- may include former employees who left the New York-based company after receiving the options.
This Bloomberg offering appeared on their Internet site at 3:00 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.
While conflicting economic data leaves hope for both bulls and bears, Alan Greenspan warns that, unlike Yellen, "U.S. economic growth is not strong." He then slays another pillar - suggesting the exuberant job growth is anything but (as he focuses on weak productivity as he pinpoints entitlements as "crowding out capital investment" in America.
The maestro then breaks the golden rule of central bankers and explains how The Fed was, in fact, the main driver of the P/E multiple expansion in stocks; and when asked if this ends as badly as last time? He concludes "It depends...When real interest rates start to move up, that's when the crisis could hit."
The interview is somewhat stunning in its honesty (for a central banker) as he warns global "effective demand is extraordinarily weak - tantamount to the late stages of the great depression."
How about being in the early stages of a depression, Alan? This story, along with an embedded 9:29 minute CNBC video clip, showed up on the Zero Hedge website at 5:50 p.m. EST yesterday afternoon---and it's worth your while. I thank Dan Lazicki for his second offering in today's column.
The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, February 26, 2015
Federal Reserve officials might have felt comfortable after the passage of the Dodd-Frank Act in 2010 that the central bank had escaped the rewrite of the nation’s financial regulatory laws with most of its powers intact. After Fed Chairwoman Janet Yellen’s testimony before the House Financial Services Committee Wednesday, they might not be so confident anymore.
“Fed reforms are needed and I for one believe Fed reforms are coming,” Committee Chairman Jeb Hensarling (R., Texas) said in a statement before Ms. Yellen’s second day of semi-annual testimony before Congress.
That was the nice part.
Ms. Yellen was skewered by House Republicans — some observers felt rudely – who accused the Fed chief of politicizing the institution by meeting regularly with Obama Administration officials and congressional Democrats and speaking out on the problem of inequality, an issue Democrats hold as their own. Their broader point was that the Fed shouldn’t claim its independence is sacred when it pushes back against legislative proposals from the right that would open it to more scrutiny from the legislative branch of government.
Jon Hilsenrath, the author of this piece, is widely known to be the unofficial mouthpiece for the Fed at The Wall Street Journal---and the story should be read with that in mind---and it is worth reading. I found it in today's edition of the King Report.
Democrats on the other hand, despite overwhelming proof that the Dodd-Frank Wall Street Reform and Consumer Protection Act has actually allowed Wall Street to grow systemically more dangerous and more corrupt since its passage, is irrationally wedded to this legislation.
No amount of evidence will change the Democrats’ position on Dodd-Frank. JPMorgan gambling with hundreds of billions of bank depositors’ money in the London Whale fiasco where $6.2 billion got flushed down the toilet will not change their mind. Cartel activity among the big banks in the interest rate market, precious metals market, foreign currency market will not change their mind. Bank chat rooms called “The Bandits Club,” “The Mafia” and “The Cartel,” where brazen market rigging is alleged to have occurred will not change their mind. Endless criminal investigations and multi-billion dollar settlements will not change their mind. Scandal after scandal destroying public trust in Wall Street and its regulators will not change their mind.
Then there is the New York Fed – the least appropriate body in all the world to be simultaneously carrying out monetary policy via instructions from the Federal Open Market Committee with the involvement of the biggest Wall Street banks while simultaneously attempting to engage in regulatory oversight of the same banks.
This short, but worthwhile commentary put in an appearance on the wallstreetonparade.com Internet site on Thursday sometime---and I thank Richard O'Mara for bringing it to our attention.
Citing Russia Today’s influence, Secretary of State John Kerry asked U.S. lawmakers for more money for propaganda and “democracy promotion” programs around the world.
“Russia Today (sic) can be heard in English, do we have an equivalent that can be heard in Russian? It’s a pretty expensive proposition. They are spending huge amounts of money,” Kerry told the House Appropriations Subcommittee, apparently forgetting that Voice of America had been broadcasting in Russian since 1947.
He had also raised the topic earlier in the day, before the House Foreign Affairs committee, where Representative Ed Royce (R-CA), opened the hearing with the allegation that “Russia’s military aggression is matched only by its propaganda.” To Kerry’s approval, Royce went on to claim that “Russia is spending more than $500 million annually to mislead audiences, sow divisions, and push conspiracy out over RT television.”
Royce’s remarks echo the claim made by Broadcasting Board of Governors (BBG) chief Andrew Lack last month, when he listed “Russia Today” (sic) in the same breath as ISIS and Boko Haram as one of the challenges facing his agency.
Well, dear reader, here's the issue as I see it---and I can't believe that I'm actually saying this at my age, but RT has been the only credible news voice out there---and has been for years. All one has to do is compare the coverage of the Ukraine/Crimea/Flight MH17 situation from RT and similar Russian sources, alongside the 'coverage' by the rest of the Western media, which includes---sadly---Canada's media. The thoughtful public that's looking for hard news has its eyes and ears open on the Internet---and they have delivered their verdict---and the correct one I might add. How did it come to this? This Russia Today news item put in an appearance on their website at four minutes past midnight on their Thursday morning, which was 4:04 p.m. in Washington. I thank reader P.F. for sending it our way---and it's certainly worth reading.
Despite the U.S.’ bottomless PR budget to influence overseas, people are not attracted by what’s on offer as they are tired of U.S. interventionism, exceptionalism, and the bombing of their countries, Daniel McAdams of the Ron Paul Institute told RT.
U.S. Secretary of the State, John Kerry, said he is concerned the U.S. is falling behind when it comes to putting out information. He stressed that RT’s influence is growing worldwide and the U.S. doesn’t have“an equivalent that can be heard in Russian.” Claiming that RT has huge costs he asked for money to be provided for the Broadcasting Board of Governors (BBG) in the U.S. RT’s budget for 2015 is $220 million while the budget of the BBG is $721 million. Kerry also heaped praise on the appointment of Andrew Lack as a head of BBG who recently put RT into the same context as ISIS and Boko Haram.
RT: John Kerry insinuated the U.S. is losing the public relations war with Russia. What do you make of that?
Daniel McAdams: The numbers speak louder than words: $700 and some million versus $200 and some, maybe up to $300 million for RT. I think the problem the U.S. has is they have an unlimited advertising budget, but the product they’re selling is not very attractive overseas. People are tired of U.S. interventionism; they’re tired of U.S. exceptionalism; they’re tired of the U.S. bombing their country – if you’re a Somali, you don’t care about listening to a radio broadcast from the U.S., you just wish the U.S. would stop bombing you.
This Russia Today news item showed up in my in-box courtesy of Roy Stephens long after I'd written the comments at the bottom of the previous story. This RT piece appeared on their Internet site at 12:24 p.m. on their Thursday afternoon---and it's worth reading as well.
Royal Bank of Scotland (RBS) chief Ross McEwan has conceded the 80 percent state-owned bank will pay staff lucrative bonuses from a pool of £421 million, despite the fact it faced losses of £3.5 billion in 2014.
McEwan took control of the scandal-ridden bank in 2012 after it became insolvent and received a £45 billion bailout at UK taxpayers’ expense.
The RBS chief told BBC Radio 4 he would not be taking a £1 million bonus this year. 2015 marks the second year he has declined to accept the annual financial reward.
Commenting on bonuses awarded to other RBS staff, McEwan admitted people are “quite right” to view them as “outrageous.”
He would be right about that, dear reader. This Russia Today news item, courtesy of Roy Stephens, put in an appearance on their Internet site at 4:26 p.m. Moscow time on their Thursday afternoon.
The Cypriot president has, on a visit to Moscow, showcased his country’s economic dependence on Russia and the emergence of an increasing threat to E.U. and U.S. unity on sanctions.
Nicos Anastasiades used the trip, on Wednesday (25 February), to formalise an accord for Russian warships to use Cypriot military bases, and to speak out against EU policy on Ukraine.
Referring to Russia as a “great country”, the 68-year old politician said: “I think it’s increasingly felt by our European counterparts that action against such a great country as Russia leads to countermeasures on the part of Russia which have negative results, not only for Cyprus, but also for a number of other European Union countries”.
This interesting news item, filed from Brussels, appeared on the euobserver.com Internet site at 8:35 a.m. EST Europe time on their Thursday morning---and I thank South African reader B.V. for sending it our way.
Western powers are preparing what they say may be their most potent weapon against Moscow's interference in Ukraine - a multi billion dollar aid package to rebuild a near-bankrupt state and realize the European dream cherished by many Ukrainians.
There is just one problem: foreign governments and international financing institutions are not willing to pour money into a dysfunctional state. Only this week the businessman brought in by the new authorities to clean up the tax service was himself suspended pending a corruption inquiry.
Donors say the former Soviet republic, crippled by war and corruption, is unable or unwilling even to identify how many roads, power plants and schools its 45 million people need, let alone meet new European standards for farms and factories.
"There's strong resistance because many people in various ways benefited from the old, inefficient and largely corrupt system," said Kalman Mizsei, the head of the E.U.'s advisory mission to Ukraine.
This Reuters article, co-filed from Brussels and Washington, showed up on their website at 11:42 a.m. EST Thursday morning---and it's worth skimming. My thanks go out to Jim Skinner for passing it along.
In 2014, preliminary estimated gold production by the top publicly-traded and non state-owned gold mining companies amounted to 30M oz, in line with the 2013 totals.
Three out of the 10 miners suffered a decline in their attributable gold output while six of them achieved growth.
With 6.25M oz of gold produced in 2014, Canada's Barrick Gold Corp. holds first place in global ranking, well ahead of its competitors.
Compared to 2013's 7.17M oz, Barrick’s gold output declined by 13%, mainly because of significant drop in output at its Cortez Mine (-33%), as well as a number of gold mines in Australia and USA which Barrick sold during the year.
This interesting gold-related article appeared on the mining.com Internet site yesterday some time---and my thanks go out to Dan Lazicki for finding it for us.
Kitco News speaks with BMO’s Jessica Fung to see how she sees gold and silver set up for the coming year.
Based on her research, Fung says she expects U.S. dollar strength, which has hindered upside potential for metals prices, to continue. “In this environment, where we expect the U.S. dollar to continue to strengthen, I think we’re going to maintain a very high gold-to-silver ratio,” she says, adding that this increasing ratio hasn’t allowed silver to keep up with any gold price upswings.
Looking to global uncertainty, Fung says gold is ‘absolutely’ a safe-haven. “It always will be and that is what it will take to drive prices higher,” she adds.
It's scarey when they use the word 'analyst' to describe people like this. She's just another mouthpiece spouting things about precious metals that she has no real understanding of. This 4:08 minute video clip appeared on the kitco.com Internet site yesterday---and it's another contribution from Dan L.
GoldCore's Mark O'Byrne has replied conscientiously to fund manager and financial writer Barry Ritholtz's ridicule of gold investment and gold investors, "12 Rules of Goldbuggery," which can be found at Rithotlz's Internet site.
O'Byrne's reply is headlined "12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold" and it was posted on the goldcore.com Internet site yesterday.
I'm grateful to Mark for riding to the defence of us "gold enthusiasts"---but I personally wouldn't have dignified Ritholz's commentary with a rebuttal of any kind. No feedback at all is worse punishment that the reasoned and learned response of Mr O'Byrne. But I salute him, thank him---and owe him a beer if we ever meet. The links to both are embedded in this GATA release.
The more I read about it the more clear it becomes that the euro, at first a monetary block in Europe, was spawned right after the U.S. abandoned gold in 1971. The European Community (EC) block was the biggest threat for the US hegemony in the seventies, if Europe would unite it could break the U.S. dollar. Europe’s aggregated gold reserves were (and still are) greater than U.S. holdings, a crucial reserve asset when fully utilized.
Soon after the inception of the Bretton Woods system in 1944 the U.S. needed to suppress the price of gold because they printed far more dollars than they had gold to back it up, finally the suppression failed in 1968 when the London Gold Pool collapsed. What followed was a two-tier system; monetary gold was valued at a fixed price far below the free market price of gold.
The two-tier system created by the American monetary wizards was anything but sustainable; foreign central banks could buy gold at the U.S. Treasury for dollars at a discount, subsequently selling the gold on the free market for a higher price, though the agreement was central banks would not trade with the private market.
Because the dollar was overvalued (against gold) European central banks exchanged billions of dollars for thousands of tonnes of gold, draining U.S. gold reserves.
This excellent commentary by Koos appeared on the Singapore website bullionstar.com yesterday---and the first reader through the door with it was Dan Lazicki. It's certainly worth reading.
The Chinese New Year, which [kicked off last week], is the largest and most widespread cultural event in mainland China, bringing with it massive consumer spending and gift-giving. During this week alone, an estimated 3.6 billion people in the China region travel by road, rail and air in the largest annual human migration.
Imagine half a dozen Thanksgivings and Christmases all rolled into one mega-holiday, and you might begin to get a sense of just how significant the Chinese New Year festivities and traditions are.
According to the National Retail Federation, China spent approximately $100 billion on retail and restaurants during the Chinese New Year in 2014. That’s double what Americans shelled out during the four-day Thanksgiving and Black Friday spending period.
As I’ve discussed on numerous occasions, one of the most popular gifts to give and receive during this time is gold—a prime example of the Love Trade.
There's nothing really new in this piece that you haven't already heard about in this column, or elsewhere---and Frank is just putting his spin on mostly old news. But, having said that, his 'spin' is worth reading---and it was posted on the dailyreckoning.com Internet site yesterday---and I thank Dan Lazicki for his final contribution to today's column.
The latest announcement from the Russian Central Bank shows, that after several months of continuing high levels of additions to its gold reserves last year, it made no new gold purchases in January, although it did offload a substantial volume of U.S. Treasuries from its foreign reserves in December.
There had been speculation late last year that Russia would, in fact, sell some of the gold it had been accumulating (171 tonnes last year) to help protect its currency in light of U.S. and E.U. sanctions and the sharp drop in energy prices which had adversely impacted the nation’s exports.
However, this proved not to be the case and it looks as though any transactions to help mitigate the decline in the ruble was accomplished through the sale of U.S. Treasuries. Altogether, over the whole of 2014, Russia appears to have disposed of more than $50 billion in its holdings of U.S. Treasuries to support the ruble and to buy gold. Some $22 billion of these sales was undertaken in December when the Central Bank bought 18.7 tonnes of gold worth around $7.5 billion.
I neglected to post this story when Lawrie first put it up on the mineweb.com Internet site four days ago, as I had my own piece on it. But, having read it for a second time, it's worth your while if you have the time.
The good news is that manipulation of the gold market has finally come under investigation by the authorities, with the U.S. Justice Department opening up an investigation into 10 major banks.
The bad news is that the investigation is centering around potential rigging of the daily price fixings for gold, silver, platinum, and palladium. I know that a number of my colleagues in the hard-money industry may disagree, but I don't think this amounts to a hill of beans in the big picture.
My greater concern is the level of longer-term price manipulation, being accomplished by either the central banks or deep-pocketed institutions, acting either in concert or simply with the same motivations. So while you'll see a lot of outrage in the blogosphere over this investigation, unless it turns up documentation of a broader strategy of manipulation, there'll be nothing to see here. Move on.
I couldn't agree more. The price management scheme is COMEX-centric---and has to do with position limits, high-frequency trading and the like---something Ted Butler has been going on about for a couple of decades. The CFTC's ex-chairman Gary Gensler wanted to put a fork in all this, but was told in no uncertain terms to butt out. The fixes themselves are mostly irrelevant. This part of Brian's monthly news letter is posted in the clear in this GATA release from yesterday---and the rest of it is worth reading as well.
Morgan Stanley said Wednesday that it has agreed to pay $2.6 billion to settle with the federal government over its role in the mortgage bubble and subsequent financial crisis.
The settlement makes Morgan Stanley the latest Wall Street bank to reach a settlement with federal authorities, following the billions paid by JPMorgan Chase, Bank of America and Citigroup.
The $2.6 billion will go to "resolve certain claims" the Justice Department intended to bring against Morgan Stanley related to its mortgage division, the bank said in a regulatory filing.
The Justice Department declined to comment. In the regulatory filing, Morgan Stanley said the agreement is not been finalized and could fall though.
This AP story, filed from New York, appeared on the abcnews.go.com Internet site at 7:25 p.m. EST on Wednesday evening---and today's first news item is courtesy of West Virginia reader Elliot Simon.
Michelle Choi, an analyst for Moody’s Investors Service, gave a credit rating to bonds issued by a New Jersey town in September. In October, she switched sides and started working for the town’s underwriter, Morgan Stanley.
Choi is one of hundreds of employees at Moody’s and other credit-rating companies, including Standard & Poor’s and Fitch Ratings, who’ve gone to work for Wall Street since the 2008 financial crisis exposed the conflicts at the heart of the ratings business.
While there’s no evidence that Choi’s job-hunting influenced the grade she gave Evesham Township’s debt, and the town chose Morgan Stanley after Choi rated its bond, the rising number of job changes in the industry raises a question: can credit analysts be impartial about grading bonds while looking for employment at banks that underwrite them?
No! Really??? Who would have thought that??? I'm shocked---tee hee! This Bloomberg news item appeared on their Internet site at 5:00 p.m. Denver time yesterday afternoon---and it's the second contribution in a row from Elliot Simon.
Oil prices dumped (last night's major 8.9 million barrel inventory build from API), pumped (the Saudi minister claiming "demand is growing" - which just seems like total fiction given economic backdrops and China's VLCC count plunge), and then this morning, dumped setting the scene for this morning's EIA inventory data. Against expectations of an 8 million barrel build, crude inventories saw a 8.43 million barrel build (5 times higher than the 5 year average). Record levels of production and record total inventory sent WTI plunging out of the gate but it is stabilizing for now...
U.S. oil production hit a new record high... (despite the declining rig count - perhaps finally putting a nail in that meme)...
This short, but very interesting Zero Hedge story contains some excellent charts---and is definitely worth your time. It was posted on their website at 10:37 a.m. EST yesterday---and I thank Dan Lazicki for sending it our way.
Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed.
Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.
The tensions add to other signs the agricultural boom that the U.S. grain farming sector has enjoyed for a decade is over. On Friday, tractor maker John Deere cut its profit forecast citing falling sales caused by lower farm income and grain prices.
Many rent payments – which vary from a few thousand dollars for a tiny farm to millions for a major operation – are due on March 1, just weeks after the U.S. Department of Agriculture (USDA) estimated net farm income, which peaked at $129 billion in 2013, could slide by almost a third this year to $74 billion.
This Reuters article filed from Chicago, was posted on their Internet site at 5:45 a.m. EST on Monday morning---and it's another item I found in Wednesday's edition of the King Report. It's a must read.
The Chicago police department operates an off-the-books interrogation compound, rendering Americans unable to be found by family or attorneys while locked inside what lawyers say is the domestic equivalent of a CIA black site.
The facility, a nondescript warehouse on Chicago’s west side known as Homan Square, has long been the scene of secretive work by special police units. Interviews with local attorneys and one protester who spent the better part of a day shackled in Homan Square describe operations that deny access to basic constitutional rights.
At least one man was found unresponsive in a Homan Square “interview room” and later pronounced dead.
Brian Jacob Church, a protester known as one of the “NATO Three”, was held and questioned at Homan Square in 2012 following a police raid. Officers restrained Church for the better part of a day, denying him access to an attorney, before sending him to a nearby police station to be booked and charged.
This article showed up on theguardian.com Internet site at 9:43 p.m. GMT on Tuesday evening---and I found it embedded in a GATA release.
Money represents your energy and your time: the days, the weeks, the months, the years it takes you to earn it, and all the things you hope to do with it. In short, money is like stored life.
Taxation, inflation, and artificially low interest rates are therefore similar to a needle and syringe tapped directly into your vein, sucking the life right out of you.
Sure, you can diversify your investments and take actions to minimize your taxes, but that alone is insufficient if the after-tax returns on your portfolio don’t keep up with the real rate of inflation—which is always higher than the cooked “official” numbers—let alone your investment goals.
The problem will only be compounded as politicians the world over look for more ways to tax or otherwise extract stored purchasing power. Investment income and retirement savings will be a juicy target. Just look at how capital gains and dividend tax rates have increased in recent years.
This commentary by International Man's senior editor Nick Giambruno appeared on his website yesterday and, if you are an American citizen, it's certainly worth reading.
The European Commission on Wednesday (25 February) gave France another two years to bring its budget within EU rules - the third extension in a row - saying that sanctions represent a "failure".
France has until 2017, having already missed a 2015 deadline, to reduce its budget from the projected 4.1 percent of GDP this year to below 3 percent.
"Sanctions are always a failure," said economic affairs commissioner Pierre Moscovici adding that "if we can convince and encourage, it is better".
Valdis Dombrovskis, a commission vice-president dealing with euro issues, admitted that France is the "most complicated" case discussed on Wednesday.
What a farce this European Union has turned into! This article appeared on the euobserver.com Internet site at 7:34 p.m. Europe time on Wednesday evening---and it's courtesy of Roy Stephens.
Greece's Left-wing Syriza government has vowed to block plans to privatise strategic assets and called for sweeping changes to past deals, risking a fresh clash with the eurozone's creditor powers just days after a tense deal in Brussels.
"We will cancel the privatisation of the Piraeus Port," said George Stathakis, the economy minister. "It will remain permanently under state majority holding. There is no good reason to turn it into a private monopoly, as we made clear from the first day.
"The deal for the sale of the Greek airports will have to be drastically revised. It all goes to one company. There is no way it will get through the Greek parliament."
The new energy minister, Panagiotis Lafazanis, warned that Syriza will not sell the Greek state's 51pc holding of the electricity utility PPC, power grid ADMIE or state gas company DEPA. "There will be no energy privatisations," he said.
This commentary by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 7:52 p.m. GMT on Wednesday evening---and I thank Roy Stephens for sending it our way. It's worth reading.
Ukrainian supermarkets have imposed rationing of basic products after the drastic fall in the value of the hryvnia. The currency has lost 70 percent of its value causing people to stockpile food and buy electronics as a hedge.
Restrictions apply for goods such as cooking oil, flour and sugar, Ukraine’s news agency UNN reports Wednesday. Retailers may sell no more than two bottles of sunflower oil, and two packs of buckwheat per customer and, depending on the store, from 3 to 5 kilograms of flour and sugar.
Bread, rice, potatoes, meat and milk are not yet rationed, but are not so plentiful on supermarket shelves.
Stores have also see higher demand for household appliances, as people consider consumer electronics an investment as prices increase on a daily basis, RIA reports. Inflation in Ukraine is expected to reach 27 percent by the end of 2015.
This must read Russia Today news item showed up on their Internet site at 2:12 p.m. on Wednesday afternoon Moscow time, which was 6:12 a.m. in Washington. I thank Roy Stephens for digging it up for us.
As Ukraine's socio-economic situation goes from worse to worst-er, today's announcement by President Poroshenko that the government will take actions to stabilize the currency (which as we previously noted, appears to be heading for hyperinflation) has Ukrainians rushing for the exits into precious metals... with only one goal in mind - wealth preservation.
This is what gold does in a fiat-currency crisis. Now if only Ukraine actually still had some gold...
Furthermore, according to RIA, on Tuesday, Ukrainian television channel Ukraina announced that with the new exchange rate, the minimum wage in Ukraine stands at around $42.90 per month, which according to the channel, is lower than in Ghana or Zambia.
Although this is a gold-related story, I thought it fit best in this spot. The embedded hryvnia/gold chart is one you know well. This brief article appeared on the Zero Hedge website at 1:22 p.m. EST on Wednesday afternoon---and I thank Dan Lazicki for sending it.
The astounding military events along with the political fallout are far more dramatic under Minsk2 than at anytime during the active Ukraine Civil War.
The danger for continued war in Ukraine will depend on whether Kiev gets outside help. Whether NATO is involved in the fighting will likely depend on the dove side of the E.U., Merkel and Hollande and others, deciding to go along with Washington. That has not changed, but for Cohen, this is less likely. However Kiev's fortunes have declined even more since Poroshenko refused a surrender of his forces in the Debaltseve Caldron. Cohen does a wonderful job of describing those final moments in the Cauldron. As it stands now there is no military of any usefulness for Kiev in the west of Ukraine, and as been stated several times, arming an army actually requires an army to arm---and Kiev simply does not have a military left.
The U.S. (who significantly was not invited to the recent Minsk talks) now has been making even more belligerent war talk. And Moscow is silent; the critical time is at hand. Putin knows. This is a deciding moment for the West, the United States, NATO, Europe, Russia and Ukraine. If Washington continues to push the war option we are looking at boots on the ground and serious political problems in Europe and for NATO.
Ordinarily I'd post this on Saturday, but here it is now, as it's very timely. This 39:47 minute audio interview from Tuesday is certainly a must listen if you have the interest, which you should. I thank Larry Galearis for bringing it to our attention.
Kiev is trying to invalidate the plan of heavy weaponry withdrawal from the demarcation line in eastern Ukraine, thus undermining the Minsk peace deal, Donbass officials claim. An OSCE top official says Kiev is not pulling away its artillery.
According to the peace deal, heavy weapons must be withdrawn from the agreed demarcation line starting February 22. But Donetsk representative Denis Pushilin and Lugansk representative Vladislav Deynego have claimed in a joint statement that Kiev is “attempting to invalidate the plan.”
The Organization of Security and Co-operation in Europe (OSCE), which has a monitoring mission in the conflict area, said Kiev has so far failed to begin moving its weapons from the demarcation line.
“Ukrainian military forces keep silent for the moment being. They don’t pull out their heavy weaponry and say that a pause is needed. That is what really triggers certain concern of the OSCE, as this pause may last indefinitely,” said the Russian ambassador to the organization, Andrey Kelin.
This news story put in an appearance on the Russia Today website at 1:54 a.m. Moscow time on their Thursday morning---and it's another contribution from Roy Stephens.
Ratings agency Moody's lowered its assessment of seven Russian financial institutions, including the banking arm of Gazprom, because of recessionary threats.
The downgrade for Sberbank, Bank VTB, Gazprombank, Russian Agricultural Bank, Agency for Housing Mortgage Lending, Vnesheconombank and Alfa-Bank follows a lowering by Moody's of the government debt rating to Baa3, the lowest investment grade rating, last week.
Moody's said it also lowered the financial strength ratings of Sberbank, Bank VTB, JSC , Gazprombank and Alfa bank.
"This is due to Moody's expectation that the prolonged recessionary environment in Russia will produce a very challenging operating environment for the country's leading banks and thereby impact their financial fundamentals," the ratings agency said in a Tuesday profile.
Without doubt this move is politically motivated. This UPI article, filed from London, showed up on their Internet site at 5:59 a.m.---but doesn't give the time zone, but I would assume EST. I thank Roy Stephens for sharing it with us.
Russia will cut off gas supplies to Ukraine if Kiev fails to pay in “three or four days,” President Vladimir Putin said, adding that this "will create a problem" for gas transit to Europe.
“Gazprom has been fully complying with its obligations under the Ukraine gas supply contract and will continue doing that,” Putin told reporters after talks with the president of Cyprus on Wednesday. “The advance payment for gas supply made by the Ukrainian side will be in place for another three to four days. If there is no further prepayment, Gazprom will suspend supplies under the contract and its supplement. Of course, this could create a certain problem for [gas] transit to Europe to our European partners.”
However, Putin expressed the hope that it would not come to that, stressing that “it depends on the financial discipline of our Ukrainian partners.”
This news item was posted on the Russia Today Internet site at 2:07 p.m. Moscow time on their Wednesday afternoon---and it's another offering from Roy Stephens.
China has been axing major U.S. technology companies from its government purchasing list in favor of local brands. Some analysts believe fears over NSA spy technology could be to blame.
The list of products for the Central Government Procurement Center (CGPC), which is approved by the Chinese Ministry of Finance, includes over 5,000 products, 2,000 of which were added in the last two years, and almost entirely from domestic companies. Among those products, foreign brands have fallen by a third, and among security-related products, by a half. As of two years ago, Cisco Systems had 60 items on the list, but now has none. Among other companies, whose products were excluded from the list are Intel’s security brand McAfee, Apple, and Citrix.
Though there are non-espionage-related reasons why China might be preferring local brands, the decline in foreign products does seem to coincide with the leaks made by NSA whistleblower Edward Snowden in 2013 about massive US spying programs.
This article showed up on the sputniknews.com Internet site at 1:33 a.m. Moscow time this morning---and has been updated since. I thank Roy Stephens for his final contribution to today's column.
In a review of complaints of manipulation of the monetary metals markets, Justin O'Connell of the Dollar Vigilante cites GATA Chairman Bill Murphy's "groundbreaking" testimony to a hearing held by the U.S. Commodity Futures Trading Commission in 2010.
O'Connell's commentary is headlined "A Brief Recent History of Precious Metals Manipulation Investigations" and it was posted on the dollarvigilante.com Internet site yesterday---and it's something I found on the gata.org Internet site yesterday.
Austria's government audit office has criticized the nation's central bank for depositing a disproportionate amount of the nation's gold reserves with the Bank of England, Bullion Star market analyst and GATA consultant Koos Jansen reports today. Jansen adds that the Austrian central bank has been steadily converting its foreign-vaulted gold from "unallocated" to "allocated" status -- that is, from being a mere credit against the depository to being ownership of particular metal.
This very interesting commentary by Koos showed up on the Singapore website bullionstar.com on their Wednesday sometime---and I found this story in a GATA release as well.
Since writing my article on what I saw as the likely reasons behind platinum’s poor performance of late despite the metal being in an apparent substantial supply deficit, a couple more things on the metal have come to my attention – one perhaps marginally positive and the other negative.
On the positive side, precious metals consultancy, Metals Focus, in its latest Precious Metals Weekly, reckons that there’s a good chance that platinum will regain its premium over gold, perhaps as soon as in Q2 this year and possibly get back to a premium level during the year averaging as much as $100 over the gold price (which is pretty much the normal situation). However there’s little in their opinion on the fundamentals side to support this argument, the key factor, being in their view, that when the U.S. Fed eventually ceases shilly-shallying and starts to raise interest rates, it will be the gold price which bears the bulk of any adverse reaction in the markets and platinum less affected. To an extent this is perhaps fair comment, but one suspects that the gold price is already taking into account a modest interest rate increase later this year and while there may be a knee-jerk reaction when the announcement is made, one suspects any price downturn will be short lived. And anyway, the way the markets behave a fall in the gold price will likely also see a platinum price downturn too.
This commentary by Lawrie is definitely worth reading---and he was kind enough to post my comments that I made on his previous article on platinum that he posted on Tuesday. This article appeared on the mineweb.com Internet site at 12:21 p.m. GMT yesterday afternoon.
For many years most of the perennially bullish precious metals commentators, led in terms of continuing vehemency on the matter by the Gold Anti Trust Action Committee (GATA), have been claiming that precious metals prices are being heavily manipulated by the big commercial banks in collusion with the U.S. Fed and other central banks. And they cite as evidence various documentation, mostly quite old, obtained under freedom of information requests, together with some seemingly very strange volume and price movements on the COMEX markets at potentially key inflection points for precious metals prices, as well as the huge short positions held in all four major precious metals by a small group of major banks in particular. It has always been the gold bulls’ gripe that the evidence they have come up with has been totally ignored by the mainstream media, but is this all changing?
In a key article published on Monday this week, perhaps arguably the most prestigious global mainstream financial newspaper of all, The Wall Street Journal, reported that at least 10 major global banks are being investigated for precious metals market rigging by the U.S. authorities. The paper notes specifically that it has received reliable information that prosecutors in the Justice Department’s antitrust division are scrutinizing the benchmark price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, presumably into activities on the major commodities markets.
This commentary by Lawrie appeared on the mineweb.com Internet site at 3:44 p.m. London time yesterday afternoon---and it's certainly worth your while.
China's gold imports from Hong Kong rose in January from the previous month, data showed on Thursday, reflecting increased demand ahead of the Lunar New Year.
Net gold imports from main conduit Hong Kong climbed to 76.118 tonnes last month from a three-month low of 71.381 tonnes in December, according to data e-mailed to Reuters by the Hong Kong Census and Statistics Department.
Jewellery demand typically rises ahead of the Chinese New Year, which fell in February this year. Analysts say import demand from the world's second biggest gold consumer after India is likely to recover this year.
This short Reuters article, filed from Singapore, appeared on their Internet site at 3:05 p.m. India Standard Time on their Thursday afternoon---and I found it on the Sharps Pixley website at 5:30 a.m. EST this morning. Most of what else is written about China's imports in this piece is pure bulls hit, so just read around it.
Despite being told by The Fed that stocks are over-valued, investors decided today was the day to take that money off the sidelines and BTFATH. Everything is surging in equity land as bad data, worse earnings, and Ukraine were trumped by a little old lady in Washington and a self-referential list of growth-destroying reforms for Greece. However, as investors sell sell sell their dollars (USD Index down hard) they are buying US Treasuries with both hands and feet...
This short Zero Hedge piece, with three excellent charts, appeared on their Internet site at 11:25 a.m. EST on Tuesday morning---and I thank Dan Lazicki for today's first story.
Despite this morning's U.S. Services PMI rise, U.S. macro data is running at a 90% miss rate in February and Richmond Fed's tumble from 6 to 0 (11mo lows) along with The Conference Board's Consumer Confidence dropping the most since Oct 2013 merely confirm this trend. This is the biggest 4-month slump in Richmond Fed since 2010 as practically every sub index deteriorated. California, Florida and New York saw over consumer confidence collapse and Texas saw 'present situation' plunge. US Macro data is now nearing its lowest in a year...
This is another brief Zero Hedge offering from Dan Lazicki. It was posted on their Internet site at 10:45 a.m. EST yesterday morning.
With economic data serially disappointing in 2015, it is probably not entirely surprising that Gallup's U.S. Economic Confidence Index fell to an average of -2 last week (with the biggest drop since July). This is the first time the index has had a negative weekly average since late December. Both the current conditions and outlook sub-indices tumbled but it was the future 'hope' index that fell the most with more people now saying the future will be 'poor' than believe it will be 'good'.
As Gallup reports, the U.S. Economic Confidence Index fell to an average of -2 for the week ending February 22.
This is the first time the index has had a negative weekly average since late December. Prior to that, the index had consistently been in negative territory since Gallup began tracking it daily in 2008.
This is another rather short Zero Hedge article from yesterday. It showed up on their website at 2:51 p.m. EST---and it's the third contribution in a row from Dan Lazicki.
The biggest scandal in today's release of Hewlett Packard Q1 earnings was not that, just as the NASDAQ is knocking on 5000's door, it reported revenues of $26.8 billion missing consensus expectations of $27.3 billion, while beating non-GAAP EPS by 1 cent to $0.92 (up from $0.90 a year ago) entirely due to a massive reduction in outstanding stock and some truly gargantuan non-GAAP add backs (GAAP EPS declined from $0.74 a year ago to $0.73) pushing the stock down 7% after hours.
The biggest scandal was the company announced that having cut 44,000 workers so far, it will cut 58,000 jobs by the end of 2015.
Incidentally, just 10 years ago Hewlett Packard employed a total of 58,000 people in the entire US.
So why is the company axing 58 thousand workers? Simple: so it can cut enough costs on top and continue to fund its now exponential surge in stock buybacks, which in the just concluded quarter was a record $1.6 billion, an increase of 178% from a year ago, and 66% more than the company spent on CapEx, in the process making its shareholders even richer while its management team get massive equity-linked bonuses.
This tiny article, with an embedded chart that's worth the trip, appeared on the Zero Hedge Internet site at 6:58 p.m. EST on Tuesday evening---and it's another story from Dan Lazicki.
We have seen though some strange things, with Economics 101 turned on its head. We’ve seen that falling prices produce more supply, as the biggest producers see that they can take market share and use the opportunity by reducing average costs through excess production. We’ve seen that in the oil, minerals and iron ore industries. We have also seen in the last couple of years that as bond yields fall, governments are able to issue more debt.
But this time round the problem we have as well is that politics will start to rear its head and we are left to deal with politicians who are increasingly critical of the capitalist system’s ability to allocate capital and provide for society.
For me the shorting opportunity looks as great as it was in 07/09, if only because people are still looking at what is happening and believe that each event is an individual, isolated event. Whether it’s the oil price fall or the Swiss franc move, they’re seen as exceptions....
This down cycle is likely to be remembered in a hundred years, when we hope it won’t be rated for “How good it looks for its age!”. Sadly this down cycle will cause a great deal of damage, precisely because it will happen despite the efforts of the central banks to thwart it.
This commentary was embedded in another Zero Hedge article from yesterday afternoon. This one showed up there at 3:12 p.m. EST---and it's now five in a row from Dan. It certainly worth reading.
J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan.
The largest U.S. bank by assets is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year, these people said. The move is the latest in a series of steps large global banks have been discussing in recent months to discourage certain deposits due to new regulations and low interest rates.
J.P. Morgan’s steps are among the most detailed and widespread. Specifics are likely to be unveiled Tuesday by J.P. Morgan executives at the bank’s annual strategy outlook with investors, these people said. Among other points, the bank is expected to stress alternatives customers affected by the deposit moves can use for their excess cash.
This WSJ article was picked up by the marketwatch.com Internet site at 8:36 a.m. EST on Tuesday morning---and the first reader through the door with it was Norman Willis.
Bank of New York Mellon Corp. is in settlement talks with the U.S. Justice Department and New York attorney general over claims the bank defrauded clients in foreign exchange transactions, according to sources familiar with the matter.
BNY Mellon last week revealed that it would take a $598 million charge as it sought to resolve matters including "substantially all" foreign exchange litigation it faced, though it did not specify which cases.
The bank faces several lawsuits, including class actions, stemming from allegations that it misled clients about how it determined currency exchange rates for certain transactions.
The Justice Department, which has a lawsuit against BNY Mellon pending in Manhattan federal court, is engaging in settlement talks, a person familiar with the matter said.
This story appeared on the Reuters website at 4:40 p.m. EST yesterday afternoon---and I found it embedded in a GATA release.
Federal Reserve Chair Janet Yellen mostly succeeded in her attempt to be vague about Fed policy in her semiannual appearance before Congress on Tuesday. On one issue, however, she was unequivocal -- and correct: A congressional audit of the Fed's interest-rate decisions is a very bad idea.
The Fed is already "extensively audited," she said, and Senator Rand Paul's bill to audit it even more "would politicize monetary policy." Were such congressional micromanagement possible in the 1970s, she pointed out, former Fed Chairman Paul Volcker would probably not have been able to defeat inflation by pushing up interest rates to double digits and forcing the economy into a recession.
Undermining the central bank's political independence would ultimately harm the economy. Studies show that independent central bankers are better stewards of their economies than are politically appointed finance chiefs. The reason is simple: Politicians often favor easy-money policies that promote short-term growth and boost their re-election chances, even if they bring on inflation later.
Well, no shades of gray here. Bloomberg is no friend of Rand Paul. This short editorial appeared on the Bloomberg website at 3:35 p.m. EST yesterday afternoon---and I thank Dan Lazicki for sending it.
It strikes us that it was passing strange for Chairman Janet Yellen to wave a copy of the central bank’s audited financial statement as a prop in answering Congress on Senator Rand Paul’s “Federal Reserve Transparency Act.” She did this earlier today at the hearing of the Senate Banking Committee. Her suggestion that a standard financial audit is what the Transparency Act is all about was almost contemptuous. So was her suggestion that the bill that has already twice passed the House — September’s bipartisan vote was 333 to 92 — is somehow designed to politicize monetary policy.
Just to underline the point, what Mrs. Yellen held up was an audited report of the kind that is done by accountants using green eye shades. What the Congress wants is a look not only at the books but also at the Fed’s holdings and minutes and transactions overseas. It is not an attempt to interfere with Fed policy. It is an attempt to find out what the Federal Reserve is doing. It’s just shocking that the Federal Reserve would want to deny to its creator this kind of inspection once every, oh, say, century.
There's no question where The N.Y. Sun lies on this issue, either. This editorial put in an appearance on The New York Sun's website yesterday---and I found it on the gata.org Internet site. It's worth reading.
One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team."
One glimpse at a few days during 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren - a former member of the U.S. President’s Working Group on Financial Markets - it is not conspiracy theory, it is conspiracy fact: "there's no price discovery anymore by the market... governments impose prices on the market."
In this 38-minute interview Lars Schall, for Matterhorn Asset Management, speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President’s Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”). They address, inter alia...
I've had several readers send me this interview over the last few days---and have put off posting it until now. The interview runs for 38 minutes---and you can read all about it, as Zero Hedge has put their spin on it which, along with the interview, is worth your while. This is also courtesy of Dan Lazicki.
Please remember this warning when you go to the ATM to get cash… and there is none!
While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us. Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.
Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage? Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.
This very interesting article by Bill showed up on the dailyreckoning.com Internet site on Tuesday sometime---and once again I thank Dan Lazicki for sharing it with us. It's certainly worth reading.
Foreign Affairs is the publication of the elitist Council on Foreign Relations, a collection of former and current government officials, academics, and corporate and financial executives who regard themselves as the custodian and formulator of US foreign policy. The publication of the council carries the heavy weight of authority. One doesn’t expect to find humor in it, but I found myself roaring with laughter while reading an article in the February 5 online issue by Alexander J. Motyl, “Goodbye, Putin: Why the President’s Days Are Numbered.”
I assumed I was reading a clever parody of Washington’s anti-Putin propaganda. Absurd statement followed absurd statement. It was better than Colbert. I couldn’t stop laughing.
To my dismay I discovered that the absolute gibberish wasn’t a parody of Washington’s propaganda. Motyl, an ardent Ukrainian nationalist, is a professor at Rugers University and was not joking when he wrote that Putin had stolen $45 billion, that Putin was resurrecting the Soviet Empire, that Putin had troops and tanks in Ukraine and had started the war in Ukraine, that Putin is an authoritarian whose regime is “exceedingly brittle” and subject to being overthrown at any time by the people Putin has bought off with revenues from the former high oil price, or by “an Orange Revolution in Moscow” in which Putin is overthrown by Washington orchestrated demonstrations by US financed NGOs as in Ukraine, or by a coup d’etat by Putin’s Praetorial guards. And if none of this sends Putin goodbye, the North Caucasus, Chechnya, Ingushetia, Dagestan, and the Crimean Tarters are spinning out of control and will do Washington’s will by unseating Putin. Only the West’s friendly relationship with Ukraine, Belarus and Kazakstan can shield “the rest of the world from Putin’s disastrous legacy of ruin.”
What we see here with Motyl is the purest expression of the blatant propagandistic lies that flow continually from the likes of Fox “News,” Sean Hannity, the neocon warmongers, the White House, and executive branch and congressional personnel beholden to the military/security complex.
This very interesting and disturbing commentary by Paul was posted on his Internet site on Tuesday sometime---and the stories from Dan just keep on coming.
A Spanish judge by the name of Fernando Andreu recently violated one of the most important unwritten rules of global finance: namely, that banks and bankers are effectively immune to all laws of all lands (barring, of course, Iceland). As I reported roughly 10 days ago, Andreu had ordered Bankia, its parent company state-owned BFA, the bank’s former chairman, Rodrigo Rato, and three other former directors to pay an €800 million civil liability bond for signing off on fraudulent financial statements in the run up to the bank’s 2011 IPO.
If the defendants fail to cough up the full amount before March 13th, the authorities will embargo assets belonging to them with the equivalent market value. With the clock ticking down and the days flying by, it was just a matter of time before the defendants hit back – and hard!
The first to hit back was Rodrigo Rato, the bank’s former chairman and one-time IMF president. In a 75-page notice of appeal that was leaked to the Spanish press, Rato cautioned that Judge Andreu’s “premature” decision to force the six defendants to compensate the thousands of shareholders they are accused of defrauding could end up provoking a “much greater evil” than that it is supposed to address.
In the worst case scenario, the document warns, it could send a “message of uncertainty to the markets,” which could in turn exert downward pressure (otherwise known as gravity) on the already semi-defunct bank’s share price. This is not the first time that a panicked banker has used this argument; indeed, it is the preferred alibi of all 21st-century banking racketeers.
This very interesting news item/commentary was posted on the wolfstreet.com Internet site on Monday---and it's courtesy of Brad Robertson.
As we noted earlier today, there was some confusion over the plight of the Greek reform proposal document, which initially was said to have been delayed until today, only for the Troika, pardon, Institutions, to flip around and say they had actually received it before midnight on Monday. How could the two be possible? Courtesy of Yannis Koutsomitis, who had the simple but profound idea of looking at the properties tab in the leaked Varoufakis draft of the agreed to proposals, we now know.
As it turns out, the reason why not only the Troika received an agreed to version of the Greek reform proposals "before midnight on Monday", but rushed these through with a favorable agreement today, is that, drum-roll, the European Commission drafted the entire letter!
All Yanis Varoufakis had to do was agree to the letter that the Troika had previously written and agreed in advance was agreeable to it, and send it back. The skeptics are encouraged to play around the original pdf "leak" found here.
As for the actual author of the "Greek" reform package, a document which was created at 10:09 pm on Monday, February 23, 2015 (so technically, yes, before midnight on Monday) was one Declan Costello of the European Commission.
This interesting news item showed up on the Zero Hedge website at 11:51 p.m. EST on Tuesday morning---and it's another contribution from Dan Lazicki.
Greece has vowed to shake up labour markets and push through far-reaching reforms to avert a fresh showdown with eurozone creditors this week, hoping to stave off bankruptcy within days as cash runs dry.
The radical Syriza government submitted a five-page list of measures to EMU officials in Brussels in time for a deadline on Monday, including an assault on trade union powers that risks setting off a revolt by the movement's Communist and hard-left factions.
Failure to reach an agreement would lead to yet another round of crisis talks, backed by the threat that the European Central Bank could at any time cut off emergency liquidity support for Greek lenders and effectively force the country out of the euro.
This Ambrose Evans-Pritchard commentary appeared on the telegraph.co.uk Internet site at 8:23 p.m. GMT on Monday evening local time---and I thank Roy Stephens for sending it along very early on Tuesday morning. It's worth reading.
Eurozone finance ministers on Tuesday (24 February) approved a list of reforms submitted by Athens and cleared the path for national parliaments to endorse a four-month extension of the Greek bailout, which otherwise would have run out on 28 February.
"We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions," the Eurogroup of finance ministers said in a press statement.
National parliaments, notably Germany's Bundestag, will still have to approve the move this week.
The three international creditors - the European Central Bank, the European Commission and the International Monetary Fund - earlier that day gave an assessment of the reforms plan and said they were "sufficiently comprehensive to be a valid starting point" for the bailout loans to be extended and paid out.
This news item was posted on the euobserver.com Internet site at 7:17 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens. There was also a story about this in The Telegraph yesterday evening GMT---and it's headlined "Troika raises fresh concerns over Greece's last-ditch debt deal"---and I found it today's edition of the King Report.
The whole Kabuki dance in the Eccles Building is about hand signals to Wall Street carry traders; its a reflection of the desperate fear of our monetary politburo that having inflated for the third time this century the mother of all financial bubbles, they must now keep it going literally one meeting at a time—lest it splatter again and destroy the illusion that an egregious spree of money printing has saved the main street economy.
Likewise, it now transpires that the bruising political war of words between the Germans and the “radical” Greek government has been suspended for another few weeks. And the reason is a pathetic fear that unites the parties despite their irreconcilable substantive policy differences. Namely, that the markets will crater upon even a hint that a real solution is on the table, and that the way to keep the beast at bay is to cover their eyes, kick-the-can and hope something turns up to avert the next crisis a few weeks down the road.
Still, this is getting beyond juvenile. If there were any adults in the room they would focus on quickly shaping a workable Greek default and exist—-not on perpetuating the lie that Greece can ever recover from its debt servitude to the EU superstate and IMF.
Ironically, the fire breathing leftists who have taken over in Athens have compliantly strapped on the poodle collar left behind by the Samaras government. It seems that their game-theory spouting Keynesian financial spokesman, Yanis Varoufakis, also fears a thundering upset in the casino. So the Syriza government stumbles forward——now visibly toting the massive debt imposed on them by the Eurozone and IMF in order to bailout the German, French and Italian banks.
This longish, but worthwhile commentary by David put in an appearance on his Internet site yesterday sometime---and it's another contribution from Roy Stephens.
While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE.
The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment.
It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting. He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back.
This story was posted on the Russia Today website at 11:44 a.m. Moscow time on their Tuesday morning, which was 3:44 a.m. in Washington. I thank Roy Stephens for sending it along.
The OPEC member states are discussing the possibility of an emergency meeting should oil prices continue to fall, said Nigerian Oil Minister, and OPEC President Diezani Alison-Madueke. Prices have dropped by than half since their peak last summer.
If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” said Alison-Madueke, as quoted by the Financial Times, adding that discussions are already underway.
“Almost all OPEC countries, except perhaps the Arab bloc, are very uncomfortable,” she said. As the cartel’s president, she is responsible for maintaining communication with member countries and Secretary-General El-Badri in case of an emergency meeting.
This Russia Today news story showed up on their Internet site at 3:05 p.m. Moscow time on their Tuesday afternoon---and it's another contribution from Roy Stephens, for which I thank him.
U.S. officials are investigating at least 10 major banks for possible rigging of precious-metals markets, even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries.
Prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.
HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.
Also under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.
I had a lot of readers send me this Wall Street Journal story yesterday---and the first person through the door with a link that I could use was Ken Hurt. But reader Michael McKay sent it to me as well, along with the following comments, which I thought worth sharing: "This article was on the Front Page of the print edition. Because this edition (central) serves Chicago, the seat of the Commodity markets, you can be very sure this was noticed by ALL the top folks. Trust me Ed, I was 23 years in those circles. This is the revealing of an open open secret that is the next big thing. But it it also true that the C[ommodity?] Markets are so very specialized that only those closest to the Metals know how significant this is. I recommend keep pushing your index finger into the open wound that this story is. Leverage is there." From your lips, to God's ears, Michael!
Bank of England Governor Mark Carney today told the Treasury Committee of the House of Commons that the bank is not participating in CME Group's program by which central banks receive discounts for their secret trading in all major U.S. futures markets.
Carney's denial came in response to a question from committee member Steve Baker, Conservative for Wycombe in England.
While no mainstream financial news organizations will question central banks about their secret trading in the markets, at least the issue seems to have come to the attention of some elected officials in Britain.
I found this worthwhile commentary, plus a video link, posted on the gata.org Internet site yesterday.
The world's biggest banks are still reeling from the consequences of the Libor and foreign exchange scandals, but U.S. authorities are now investigating the possibility of more rigging.
Several banks are being scrutinised over how they set influential benchmarks in the markets for gold, silver, platinum and palladium in London, with at least 10 under investigation from the Department of Justice (DoJ) and Commodities and Futures Trading Commission (CFTC), according to reports.
The benchmarks, which influence the prices of financial products as well as valuable jewellery, were set by a telephone conference call by a group of banks until last year, when they were overhauled amid mounting scrutiny of market rigging.
This gold-related news item showed up on the telegraph.co.uk Internet site at 12:36 p.m. GMT yesterday---and in many respects its similar to the WSJ story further up. It's another item I found in this morning's edition of the King Report.
If you thought HSBC-bashing would quickly drop off the list of national sports, think again.
As if all the chicanery and wrongdoing around its Swiss tax evasion foundry weren’t enough, now it admits it’s also under investigation for possible rigging of the gold price.
This time, the U.S. regulators are probing, but the possible collusion happened here in London.
It’s tempting now to tally up a list of the charges and suspicions against HSBC, from sanctions busting to aiding Mexican drug cartels, through Libor and currency fixing to, now, potentially manipulating the price of gold, silver, platinum and palladium.
Probably guilty as charged, especially in gold. This article appeared on the London Evening Standard Internet site at yesterday GMT---and it's courtesy of Nick Laird
Switzerland's competition commission WEKO is looking into possible manipulation of price fixing in the precious metals market, its spokesman said today.
"We have a preliminary investigation into the manipulation of gold and precious metal price fixing," the spokesman said. He declined to say which banks were involved.
The spokesman said this preliminary investigation began in 2014, without elaborating.
This Reuters story appeared on their Internet site at 12:48 p.m. EST yesterday---and it's another gold-related news item I found in a GATA release.
The Euro zone raised its gold holdings by 7.437 tonnes to 10,791.885 tonnes in January, International Monetary Fund data released overnight showed.
The rise in gold holdings was small in tonnage terms and in percentage terms – especially when viewed in the light of the recently launched ECB’s €1 trillion Q.E. monetary experiment.
Nevertheless, the rise in Euro-area gold holdings shows how the ECB continue to view gold as an important monetary asset. Mario Draghi said of gold in October 2013 that gold is a “reserve of safety” that “gives you a value-protection against fluctuations against the dollar.”
Draghi told an open forum at Harvard’s Kennedy School of Government, why central banks want gold and what value it offers. He said that there were “several reasons” to own gold including “risk diversification”.
This commentary by Mark O'Byrne was posted on the goldcore.com Internet site yesterday---and it's definitely worth reading. There was another story about this over at the mineweb.com---and it's headlined "Kazakhstan adds gold for 28th straight month".
G-E: What is your overall Investment Outlook for 2015?
Nick: I am seeing 2015 as a year of great volatility and uncertainty and there are many problem areas that could get dramatically worse. Unless something goes drastically wrong, like a Swiss currency issue out of the blue or something along those lines, I don’t think the gold price will do much until September, and will likely stay in the $1,100 to $1,300 range. If nothing dramatic happens, we will have volatility and uncertainty. The U.S. equity markets are experiencing increasingly greater volatility.
G-E: What asset classes are considered today very inexpensive relative to historical standards and current global economic conditions?
Nick: For the precious metals sector, gold, silver and platinum are very inexpensive today. Right now there is a rare anomaly where platinum is below the price of gold and silver is grossly undervalued with respect to gold. The silver/gold ratio is around 73:1. Based on the US geological survey of how much gold to silver is in the ground, there is sixteen times more silver than gold in the earth’s crust. Under the U.S. Coinage Act when you had the bimetallism standard, it was 16:1. In 1980 the ratio was 16:1. If the ratio reverted to the mean it would be around 56:1. The prices are way out of line for silver and there is a depressed gold price. Platinum is grossly undervalued, silver is grossly undervalued relative to gold and gold is dramatically undervalued.
Undervaluation brings us to the $10,000 per ounce gold figure. Until 2012, the U.S. debt and the gold price had a positive correlation of 97%. Then the figures diverge through manipulation, the gold price goes down and the US debt keeps rising. To get back to the correlated relationship that has been there for at least 20 years, the gold price would have to return to around $1,800. Gold is undervalued, silver is more undervalued and platinum is undervalued, so there is a lot of catching up to do. Instead of getting distracted by the manipulation, consider it a gift from the central banks. Right now gold, silver and platinum are all at a discount, so it is an ideal time to buy as much as you can.
Nick has never been able to develop the courage to say that precious metal prices are managed, even though he knows they are. This interview with Toronto-based Bullion Management Group CEO Nick Barisheff appeared on the gold-eagle.com Internet site on Sunday---and I thank reader M.A. for pointing it out. It's certainly worth reading as well.
If anything demonstrates the illogicality of the precious metals markets, it appears to be platinum. But is this really the case? Currently the metal is languishing at around a five-year low, yet most analysts put global platinum supply as being in a substantial deficit situation ever since last year’s South African platinum mine strikes, which took a substantial hunk of the metal out of the markets. Platinum is also selling at a lower price than gold – around $40 an ounce lower at the moment – which is a relatively rare, but not unknown, occurrence.
Indeed the world’s most respected platinum analysts at Johnson Matthey suggested that the platinum deficit last year was upwards of 1.1 million ounces – and in a total global market of around 8.5 million ounces, that is a big percentage deficit of getting on for 13%. Not only was platinum in deficit in 2014, but it had also been in deficit for the previous two years too, although not as large.
Indeed most analysts have been falling over each other to predict better things for platinum prices this year. In the recent LBMA metals forecasting competition both platinum and its sister metal palladium were seen as the precious metals price winners over the year, and while it is early days yet, recent market prices suggest that this may not actually happen.
As you already know, dear reader, platinum prices are managed just as much as the other three precious metals. It's price won't rise until JPMorgan et al decide---because as you also already know, supply/demand fundamentals mean nothing. Prices are set in the COMEX futures market by "da boyz"---and until that changes, nothing changes. This isn't rocket science. As Chris Powell said: "There are no markets anymore---only interventions." This commentary by Lawrie showed up on the mineweb.com Internet site at 2:17 p.m. GMT yesterday afternoon---and it's the final contribution of the day from Dan Lazicki, for which I thank him.